8 Fascinating Reads

Good reads, short quotes.

Happy Friday! There are more good news articles on the Web every week than anyone could read in a month. Here are eight fascinating pieces I read this week.

Sad because it's trueThe blog Interfluidity gives an honest assessment of modern finance:

Finance has always been complex. More precisely it has always been opaque, and complexity is a means of rationalizing opacity in societies that pretend to transparency. Opacity is absolutely essential to modern finance. It is a feature not a bug until we radically change the way we mobilize economic risk-bearing. The core purpose of status quo finance is to coax people into accepting risks that they would not, if fully informed, consent to bear.

PaybackFannie Mae and Freddie Mac have now paid back all of their government bailouts and then some, leaving taxpayers with a profit:

U.S. taxpayers have recouped all of the $187 billion they gave mortgage giants Fannie Mae and Freddie Mac in one of the most expensive bailouts of the financial crisis.

The milestone was reached after Fannie Mae reported Friday it will pay Treasury an additional $7 billion in profit from the end of last year.Beginning in late 2008, the federal government bailed out the two firms that had become nearly the only source of loans for American home owners. With the payment announced Friday, the payments from the two firms now comes to $192 billion.

Nice work if you can get itThe Financial Timesoutlines the outrageous fees some U.K. investors pay advisors:

Barclays Wealth and St James's Place have the highest 12-month charges, of 6.55 per cent and 7.48 per cent respectively, inclusive of all fund management fees, if a client only stays with the firm for one year.

The stress that financial traders suffer during periods of high volatility in the markets reduces their appetite for risk, according to a study led by Cambridge university neuroscientist and former Wall Street trader John Coates. This may prolong financial crises.

Two close boyhood friends grow up and go their separate ways. One becomes a humble monk, the other a rich and powerful minister to the king.

Years later they meet. As they catch up, the minister (in his fine robes) takes pity on the thin, shabby monk. Seeking to help, he says: "You know, if you could learn to cater to the king you wouldn't have to live on rice and beans."

To which the monk replies: "If you could learn to live on rice and beans you wouldn't have to cater to the king."

Wall Street is notorious for the long hours it imposes on its worker bees. (One young banker bragged to me about working the "banker 9-to-5," defined as 9 a.m. until 5 a.m. the next day.) But lots of professions -- law and medicine, to name just two -- work their underlings hard. What makes banking different is that the work can arrive at any moment, unannounced and requiring immediate attention. If a client needs a PowerPoint presentation at 4 a.m. on Christmas morning, a junior banker will have to wake up and get to the office.

[Peter] Lynch remains untouched by anyone -- whether they managed money before his career, during it or in the 25 years since. No one even comes close.

What made him special? He made changes in a diverse variety of market environments without obsessing over one metric or another like a dying man clutching a religious totem to his chest.

Lynch had six basic "stories" or types of stocks he liked to play and he leaned toward whichever ones were offering the best opportunities at a given time. He didn't walk around wearing a sign on his chest that said "Value Investor" or "Momentum Trader" or "Growth At a Reasonable Price Guy" or "Turnaround Player" and he certainly didn't care to be put into someone else's style box. Lynch knew that no approach worked best all the time.

DataWatch this awesome video about how nature is explained with numbers: